New York Expands Restrictions on Non-Disclosure Provisions in Certain Agreements

New York has enacted legislation (Senate Bill 4516) that further limits the terms employers may include in release agreements related to discrimination, harassment and retaliation. Senate Bill 4516 is effective immediately and applies to agreements entered into on or after Nov. 17, 2023.

The details

Background

New York General Obligations Law Section 5-336 prohibits an employer from requiring confidentiality provisions in agreements to resolve unlawful discrimination claims, unless requested by an employee.

A release agreement that has a confidentiality provision covering discrimination or sexual harassment claims must be executed in two parts. The agreement must state it is the employee’s preference to enter the agreement; and the employee has 21 days to consider the agreement and 7 days to revoke their consent after the expiration of the 21-day period.

Senate Bill 4516

Senate Bill 4516 amends Section 5-336 to:

• Expand protections under the law, previously only granted to employees and potential employees, to now include independent contractors.
• Allow employees to accept the terms of a release agreement containing a confidentiality provision prior to the expiration of the 21-day period, instead of the previous law that required the 21 days to pass before the employee could sign any such agreement; and
• Render some agreements unenforceable if release of a covered claim requires that the complainant:
• Add further restrictions to confidentiality agreements related to harassment, discrimination and retaliation.

Next steps

• Consult legal counsel to help ensure compliance with Senate Bill 4516.